BUSINESSWEEK ONLINE : APRIL 26, 1999 ISSUE
COVER STORY

The Gadfly of Trinity Place
Edward Manfredonia has been crying in the Amex wilderness

His friends had warned him to stay away. But on Feb. 9, 1999, Edward R. Manfredonia decided to take a chance. For the first time in eight years, he walked through the front door of 86 Trinity Place, headquarters of the American Stock Exchange Inc., and asked to use the library on the fifth floor.

The Amex library is open to the public. Anybody who walks in off the street can just drop by and use it without even calling ahead. The visitor standing directly behind Manfredonia had no trouble getting a visitor's pass to use the library. But not Manfredonia. After waiting 20 minutes, the answer came down from an Amex manager: No. Manfredonia could use the library only if he were accompanied by a security guard, who would watch him while he was there. No one was available to keep an eye on him, so he had to leave. ''They let all kinds into this building,'' said one of the guards. ''I don't see why you should be the exception.''

But the real reason was made plain in the lobby of the Amex building. While Manfredonia was kept waiting, a trader on the floor of the exchange came by and said hello. Then another. And then others. Some were merely acquaintances. But others were contacts who had provided Manfredonia, at considerable risk to themselves, sensitive information about the inner workings of the exchange.

VOCAL THORN. That is what makes the diminutive, 51-year-old Manfredonia persona non grata at the American Stock Exchange. For the past eight years he has become a familiar figure in the vicinity of the Amex building. Talking to people. And then going home and writing letters. This former Amex trader works full-time with one aim in mind--to ferret out wrongdoing on the American Stock Exchange and pass it on to anyone who will listen.

Amex Chairman Richard F. Syron says that Manfredonia has made ''wild'' accusations and that the volume and extreme tone of his letters have hurt his credibility. And other Amex officials had little to say about Manfredonia on the record, though privately they sought to discredit him. But some Amex members privately take a far different view. ''Over the past couple of months, we've talked about a whole bunch of subjects, and I've taken a liking to the guy,'' says one former high Amex official. ''I think he's trying to do what he thinks is right and deal with things he thinks were unfair.''

Manfredonia first came to the Amex floor as a clerk in the early 1980s and then worked his way up to trader in 1984. Occasionally he would quietly go to the media with tips. In 1988 it came to his attention that certain brokerages were involved in ''index front-running''--trying to make a killing in index options by manipulating the price of the underlying index. Manfredonia learned his first lesson as a whistle-blower--some people just don't want to listen. One prominent financial journalist ''wanted trading records, which was just impossible. When I couldn't get them, he lost interest,'' he recalls.

Manfredonia became a permanent, vocal thorn in the side of the exchange after disturbing information came his way in 1989 and 1990. He learned that employees of a specialist firm, run by a highly placed figure at the exchange, had allegedly been sexually assaulted by the official. The women would not come forward--but Manfredonia did, in complaints to the authorities that, evidently, did not endear him to exchange officials. A year later he was fired from the now-defunct trading firm that employed him at the time--at the behest of the Amex, he insists, for ''spreading rumors.''

Manfredonia says he was blackballed--barred from employment with any firm doing business on the exchange. He has been unemployed since leaving the Amex floor, subsisting on savings and help from friends--and spending a good part of his time fighting the Amex, and losing. Manfredonia has written hundreds of letters to regulators, law enforcement, and the media, leaving him with little more than piles of green certified-mail receipts. ''We are well aware of the information you've given us, and we are in fact looking into it,'' one prominent newspaper executive assured Manfredonia back in 1993 after getting a series of letters about alleged transgressions at the Amex. ''We know how to reach you,'' the exec continued, ''and there's no need to keep sending letters.'' Manfredonia stopped sending letters--and the newspaper, he notes ruefully, did nothing.

Among the subjects of his letters was former Spear, Leeds & Kellogg Managing Director Pasquale ''Pat'' Schettino (page 102). Manfredonia wrote letters to, among others, officials of companies whose stocks were allegedly traded by Schettino. That led to a libel suit by Schettino. Manfredonia, who is struggling to fight the case without an attorney, says the suit was an effort to silence him and force him to reveal his contacts. He maintains the suit was inspired by the Amex, which the exchange's head of member-firm regulation, Stephen Lister, vigorously denies. Schettino's attorney, Eric Levine, declined comment on the suit.

Manfredonia's letter-writing campaign has hardly been an example of effective business communication. His letters are often filled with trading-floor jargon and accusations in screaming-headline boldface. ''We got letters. I think we looked into it or referred to it to someone else. I didn't give it much merit or credibility. I never really looked into his allegations,'' says one former regulator who has received letters from Manfredonia. ''That's the problem with whistle-blowers. They may have a very meritorious claim, but they don't convey it well.''

Manfredonia has become a figure of fun, sometimes openly taunted by Amex traders and clerks. But one thing is certain. Regulators and law enforcement cannot claim that they could not have known what's been going on at the American Stock Exchange. Ed Manfredonia has been telling them for years.



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